Joint Venture between De Beers Diamond Company and Botswana - Essay Example

Task BUSINESS ENVIRONMENT AND PUBLIC POLICY Joint Venture between De Beers Diamond Company and Botswana From the first policy issue on Joint Venture between De Beers Diamond Company and Botswana, De Beers Diamond Company discovered diamond mines in Botswana after the country gained its independence in 1967. It is the main company that produces and sells diamonds in Botswana. The company has a relatively fair relationship with the government of Botswana. It has established a fifty-fifty joint venture relationship with the government from its operations in the country. It has also entered into a partnership with the government of Botswana by giving 15 percent of its shareholding to the government. The company has a truly effective corporate social responsibility in the country. The Chief Executive Officer of the company, Mr. Penny, clearly states that a company does well when it does good-beneficiation (Goldsmith, Arthur 136). This has had a great impact in the growth of the country over time. De Beers Diamond Company believes in giving back to the society by contributing to the improvement of the living standards of the people of Botswana. This is seen through its commitment to better the infrastructure and superstructure of the country by building roads, hospitals as well as schools. The company has improved the social welfare of the Botswana people by implementing educative and awareness programs on health issues and most importantly on H.I.V and A.I.D.S. The company believes that helping the people of Botswana remain productive and live in better conditions will have a positive impact on its operations. In the economic aspect, the company has greatly boosted the country’s economy. Its operations currently cater for one third of the Gross Domestic Product (GDP) of the country’s economy. Through the discovery of diamond in the country, the company has empowered the country to deviate from over reliance on the agricultural sector and has given it a competitive advantage in the diamond trade. Both the social and economic role go hand in hand. It is very had to separate the two as they are driven by similar factors. Through the economic gains reaped by the company from its operations, the benefits are able to contribute to economic growth, as well as foster, social development through the various projects. Through the economic role the company plays, the people are able to benefit from a more stable economic and this indirectly improves their standard of living. This is a perfect example of sound business practice. A company must be able to support its community, for whom it may not have existed. A business should act as a good citizen. It should acknowledge a country as its own in order to have the spirit of giving back and contributing to the welfare of the country. De Beers for decades had been a monopolistic company, which regulated the prices of diamond keeping the prices higher by controlling the level of supplies of the diamonds. It used the mechanism of supplying just enough diamonds to merchants and to match the demand and held on to the excess supply. Its practice dwelt on creating a perceived scarcity in order to raise the price of diamond. The fact that it was on one of the world’s great marketing company established it as a exceptionally rigorous monopolist with cartels all over Africa. When the era of blood-diamonds kicked in, it posed a threat to De Beers as a monopolist. Rebels who did not want to joint De Beers’s cartel tore Africa countries apart and forced people to mine diamonds. These diamonds were to be sold to purchase arms and this lead to diamonds being branded with a lousy reputation hence the term “blood-diamonds”. This posed a threat to De Beers Company as its core business was trading diamonds. The management of the company had to change its business strategy in order to safeguard its operations. It deviated from controlling the supply of diamond from third parties and instead selling the diamonds it mined. The blood-diamonds threatened to take over the business from the company, and this would have led to its collapse. The company changed from a monopolist to a joint venture, in order to restore the proper reputation that diamonds had previously enjoyed and at the same time increase their profitability. This model would see the company increase its profits despite reducing its market share in the diamond market. One of the major advantages of a joint venture is that both the government and the company are able to share resources and have equal benefits from the same. With the joint venture the government and the company offer complementary abilities of the shared resources that will jointly contribute to the growth and development of both entities. The government has played a very important role in its contribution towards the growth of Botswana. It is only through the political goodwill of the government that has led to De Beers Company to flourish as well as the country. It is through the government’s continued support and motivation that the country has done well. Good leadership that the government has contributed substantially in the growth of Botswana (Goldsmith, Arthur 139). Flush with Energy: Environmental Policy in Denmark From the article by Thomas (2008), Denmark was prompted to come up with an energy policy during the Arab oil crisis that took place in 1973. This policy was mean to safeguard the country from coming to a standstill when such an embargo occurs due to its overreliance on oil as a source of energy. The program included taxes on gasoline, Carbon IV Oxide emissions taxes as well as an efficiency standard on building and appliances that was set to lower the energy consumption levels while still allowing the growth of the country’s economy. This program implemented both regulations and taxes. The goal of the program was to ensure the country comes up with innovative ways to produce clean-power for its people. This policy has had a great impact on the country. One economic benefit that the country has derived is job creation for the Danes. The use wind as a source of energy has created job opportunities in the wind industry. This has had a positive impact on the economy of the country. The policy has also seen the country increase its energy technology exports in comparison to the overall exports. Socially, policy the policy has motivated its citizens to be more accountable for their energy consumption and has empowered them to use creative ways of minimizing their energy consumption levels. This policy that implemented smart tax policies and incentives to regulate the energy levels has had a positive impact on the growth of companies towards being innovative. The world biggest wind turbine company, Ditlev Engel, is a key witness of how a change from the era of using oil as the source of energy to the use of wind can steer a country in the right direction in managing its energy needs. The U.S has taken a naïve approach to mitigate on climate change through regulating its energy sector. It has not taken up any innovative ways of reducing reliance on oil as a source of energy. Its adamancy extend its production tax credit for wind development has had a negative impact on its strategy to control climate change (Goldsmith, Arthur 206). Tax Brakes: Curbing Emissions in the United States The policy takes a short term angle. It seeks to reduce the level of energy consumption of people. It works at giving rewards to those who are innovative in their cutting back on the level of usage of energy. This has a benefit to the society in the sense that the people are able to cut back on their consumption of energy by reducing on the habits tend to consume a lot of energy. It has a positive impact on the behavior of the people as they are able to pick up good practices, and become more responsible on how they use energy. The government is greatly relying on subsidy incentive to lower the consumption levels. This is through the giving of credits to taxpayers who consume less energy. The subsidies are awarded based mileage covered by a person. This is a very regressive policy as it works on cutting back on the consumption based on some reward system instead of coming up with better, more reliable energy sources for the country. It only encourages companies to develop cars that are energy efficient. Energy companies and car makers are the only ones who benefit as they receive big subsidies as well as, tax breaks to facilitate their efforts in coming up with better means of conserving energy. The Americans do not benefit much as they have to forego their luxurious lifestyles in order to cut back on their energy consumption levels. This greatly strains the people in their effort to raise their tax credits (Goldsmith, Arthur 366). Work Cited Goldsmith Arthur, Business, Government, Society: The Global Political Economy, New York Thomson Publishing 2006. ISBN 0-7593-8891-1 Read More